Market Update: Oil, are sellers in control?

November 3, 2021
by Joseph Jeffriess, Market Analyst

Hi traders, today we’re taking a look at oil, as sellers look to now have control of short-term momentum.

Oil has seen an amazing run-up after hitting 62.05 back in August. Since that low, we’ve seen 38.50% added by buyers to the October high. These higher prices have added to energy worries and have started to be felt by consumers. Just the other week, I filled up diesel for 190.90 cents at the local gas station in Melbourne. While this might be low compared to other parts of the world, it was a bit of a price shock for me.

China has also mentioned lately it was concerned about high oil prices exasperating its own energy worries at the moment. Inflation continues to be a leading headline in the US and now that’s creeping into many more nations. Higher fuel costs with relaxing restrictions (more demand) and northern hemisphere winters coming could add to current rises in inflation readings.

On the short term, those worries look to be abating for now as we see a few signs on the daily USOUSD chart that’s suggesting sellers could be holding some control over price. Looking at the daily oil (USOUSD) chart we can see the HH that ended the last extension higher. The last push by buyers failed to hit a new HH and instead set a LH. This LH with a fast trend break is a decent sign that sellers have short term control. Price continues to move lower today and has started to edge back into demand (orange box) / support below. A break of demand/support and a break of the med trend line further thoughts sellers could be looking to push at an extended move lower.

Overall trends remain up, so we will continue to look at new LH and HH to show possible continuation points. If sellers fail to break demand/support this could set up a new move by buyers to return to the 2021 highs.

Oil daily

All times are AEDT.